20th Apr 2016 08:07
LONDON (Alliance News) - Shares in Chip designer ARM Holdings PLC rose to the top of the FTSE 100 Wednesday after it reiterated guidance for full-year dollar revenue in line with market expectations, and it reported a rise in pretax profit for its first quarter.
Shares in ARM were up 3.8% at 1,000.32 pence Wednesday morning, the biggest gainer in the FTSE 100.
ARM saw pretax profit rise to GBP112.0 million in the first quarter of 2016, up from GBP103.4 million the year before, as revenue rose 14% to USD398.0 million from USD348.2 million. In sterling, revenue rose 22% to GBP276.4 million from GBP227.5 million.
Within this technology licensing revenue rose 16% in sterling to GBP100.8 million from GBP86.6 million, whilst royalty revenue was up 25% to GBP152.4 million from GBP121.5 million.
The company signed 39 processor licences in the quarter, including sixteen companies acquiring their first ever ARM processor licence, the company said.
ARM attributed its royalty revenue growth to an increasing proportion of its ARMv8-A processor-based chips being used in mobile computing and enterprise devices. 4.1 billion ARM processor-based chips were shipped in the quarter, up 10% compared to the previous year, ARM said.
Operating expenses rose 36% to GBP157.0 million from GBP115.4 million as ARM continued its drive to speed up its share gains in newer markets such as networking infrastructure and servers. The company has been bolstering headcount as part of this drive, and had 4,064 staff as at the end of the first quarter, compared to 3,975 as at the end of 2015.
ARM said that, at the start of 2016, it has seen its current technology gaining share in target end markets and strong demand for its next generation of products from a wide range of companies. The company highlighted a "robust" licensing pipeline for the remainder of 2016, saying leading companies are looking to license ARM technology for their next-generation products.
Looking ahead, ARM warned that macroeconomic uncertainty remains, and could influence consumer and enterprise spending in 2016, "potentially impacting semiconductor sales and industry confidence".
However, based on current conditions in the semiconductor industry, ARM expects to see full-year dollar revenue in line with market expectations. Notably, at the time of the company's 2015 results in February it had said that full-year revenue would be "broadly" in line with market forecasts, but this qualifying word was omitted from Wednesday's outlook statement, suggesting greater confidence in this forecast.
"Devices are increasingly being improved by first becoming digital, and then smart, and then connected. This is generating huge amounts of data that needs to be protected, transmitted, managed and stored across the internet. These trends are creating fantastic opportunities for ARM and our Partners. They are driving our licensing, as more companies need access to smart processors to build intelligence into more products, and they will drive future royalty revenue as more consumers and enterprises choose to buy smarter and more connected products," said Chief Executive Officer Simon Segars in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
ARM.L